South Africa: Troubled parastatals look to Africa for growth

(Mail & Guardian) - Malusi Gigaba's department of public enterprises has set its eyes on the burgeoning markets in the rest of Africa in a bid to grow profits for the country's ailing parastatals.

...Gigaba said the department had to push forward with new strategies to make the parastatals profitable. "It's not a chicken and egg issue – the two will reinforce each other. It is quite clear that financial challenges have to be addressed but we have to start somewhere. This is part of sorting out their house and putting it in order. What they are doing here is pretty much aligned with addressing their balance sheet," Gigaba told the M&G in Accra, Ghana.

The minister was in the West African city with his team and a number of parastatal heads to find a market for their services. "Ghana has serious infrastructure challenges and at the same time we have serious areas of interest in Ghana," said Gigaba.

The country has experienced phenomenal growth in the past few years, boosted by the discovery of oil and a rapid expansion in the ICT sector.

Ghana's economy grew as much as 16% in a single quarter last year, while the rest of the world battled recession. The peaceful transition in the middle of the year when President John Atta Mills died unexpectedly cemented its place as a model and stable African democracy.

However, the country's infrastructure has lagged behind, affecting its ability to capitalise on the rapid growth. Its railways have been unable to carry all its mining produce to the ports, which in turn are heavily congested. And the hydropower energy sector has battled to keep up with new demand, relying on expensive oil-based generation to fill the gaps.

The big prize for South Africa would be stepping into a neat gap in the market: a transportation hub in West Africa. This would include a thriving port which would stop major shipping lines from going through Spain or Morocco to get to West Africa, as well as a an aviation routing hub.

With Accra being the closest city to the literal centre of the world, it is far better positioned than South Africa to traffic growing travel between the BRIC countries and the West. Gigaba envisions SA Express as a feeder airline to the region.